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Financial Terms | |
Debt service |
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Definition of Debt serviceDebt serviceInterest payment plus repayments of principal to creditors, that is, retirement of debt.
Related Terms:Debt-service coverage ratioEarnings before interest and income taxes plus one-third rental charges, divided Debt service parity approachAn analysis wherein the alternatives under consideration will provide the firm Economic riskIn project financing, the risk that the project's output will not be salable at a price that will Equivalent loanGiven the after-tax stream associated with a lease, the maximum amount of conventional Net Cash after OperationsCash flow available for debt service—the payment of interest and principal on loans. Generally calculated as cash provided by operating activities before interest Production payment financingA method of nonrecourse asset-based financing in which a specified Allowance for bad debtsAn offset to the accounts receivable balance, against which ![]() Bad debtAn account receivable that cannot be collected. Bad debtsThe amount of accounts receivable that is not expected to be collected. bad debtsRefers to accounts receivable from credit sales to customers Concentration servicesMovement of cash from different lockbox locations into a single concentration Cost of DebtThe cost of debt (bonds, loans, etc.) that a company is charged for DebtMoney borrowed. DebtBorrowings from financiers. DebtFunds owed to another entity. Debt capacityAbility to borrow. The amount a firm can borrow up to the point where the firm value no ![]() Debt CapacityAn assessment of ability and willingness to repay a loan from anticipated future cash flow or other sources. Debt (Credit Insurance)Money, goods or services that someone is obligated to pay someone else in accordance with an expressed or implied agreement. debt may or may not be secured. Debt displacementThe amount of borrowing that leasing displaces. Firms that do a lot of leasing will be Debt/equity ratioIndicator of financial leverage. Compares assets provided by creditors to assets provided Debt/Equity RatioA comparison of debt to equity in a company's capital structure. Debt FinancingRaising loan capital through the creation of debt by issuing a form of paper evidencing amounts owed and payable on specified dates or on demand. Debt instrumentAn asset requiring fixed dollar payments, such as a government or corporate bond. Debt InstrumentAny financial asset corresponding to a debt, such as a bond or a treasury bill. Debt leverageThe amplification of the return earned on equity when an investment or firm is financed Debt limitationA bond covenant that restricts in some way the firm's ability to incur additional indebtedness. Debt marketThe market for trading debt instruments. ![]() Debt ratioTotal debt divided by total assets. Debt RatioThe percentage of debt that is used in the total capitalization of a Debt reliefReducing the principal and/or interest payments on LDC loans. Debt securitiesIOUs created through loan-type transactions - commercial paper, bank CDs, bills, bonds, and Debt SecurityA security representing a debt relationship with an enterprise, including a government Debt swapA set of transactions (also called a debt-equity swap) in which a firm buys a country's dollar bank debt-to-equity ratioA widely used financial statement ratio to assess the Debtor in possessionA firm that is continuing to operate under Chapter 11 bankruptcy process. Debtor-in-possession financingNew debt obtained by a firm during the Chapter 11 bankruptcy process. DebtorsSales to customers who have bought goods or services on credit but who have not yet paid their debt. Firm's net value of debtTotal firm value minus total firm debt. Full-service leaseAlso called rental lease. Lease in which the lessor promises to maintain and insure the Funded debtdebt maturing after more than one year. funded debtdebt with more than 1 year remaining to maturity. grade (of product or service)the addition or removal of product Index Portfolio Rebalancing Service (IPRS)Index Portfolio Rebalancing service (IPRS) is a comprehensive investment service that can help increase potential returns while reducing volatility. Several portfolios are available, each with its own strategic balance of Index Funds. IPRS maintains your personal asset allocation by monitoring and rebalancing your portfolio semi-annually. Information servicesOrganizations that furnish investment and other types of information, such as Interest rate on debtThe firm's cost of debt capital. Internal Revenue ServiceA federal agency empowered by Congress to interpret and enforce tax-related laws. Junior debt (subordinate debt)debt whose holders have a claim on the firm's assets only after senior Long-term debtAn obligation having a maturity of more than one year from the date it was issued. Also Long-term debtA debt for which payments will be required for a period of more than Long Term DebtLiability due in a year or more. Long-term debt/capitalizationIndicator of financial leverage. Shows long-term debt as a proportion of the Long-term debt ratioThe ratio of long-term debt to total capitalization. Long-term debt to equity ratioA capitalization ratio comparing long-term debt to shareholders' equity. McNamara-O'Hara Service Contract Act of 1965A federal Act requiring federal contractors to pay those employees working on a federal contract at Mezzanine DebtRefers to non-conventional debt that has a greater element of risk than secured debt but has less risk than equity. MM's proposition I (debt irrelevance proposition)The value of a firm is unaffected by its capital structure. Monetizing the DebtSee printing money. National DebtThe debt owed by the government as a result of earlier borrowing to finance budget deficits. That part of the debt not held by the central bank is the publically held national debt. Non-financial servicesInclude such things as freight, insurance, passenger services, and travel. Original issue discount debt (OID debt)debt that is initially offered at a price below par. Product/service mixSee sales mix. Public DebtSee national debt. Publicly Held National DebtSee national debt. RATIO OF DEBT TO STOCKHOLDERS’ EQUITYA ratio that shows which group—creditors or stockholders—has the biggest stake in or the most control of a company: Secured debtdebt that, in the event of default, has first claim on specified assets. secured debtdebt that has first claim on specified collateral in the event of default. Senior debtdebt that, in the event of bankruptcy, must be repaid before subordinated debt receives any payment. Senior DebtAre debt instruments that provide financing, take primary security against either specific or all assets of the borrower, have fixed terms of repayment and charge fixed or floating interest rates. service companyan individual or firm engaged in a high or moderate degree of conversion that results in service output service departmentan organizational unit that provides one or more specific functional tasks for other internal units Service RevenueRevenue recognized from the provision of services as opposed to the sale of service timethe actual time consumed performing the functions Short-term investment servicesservices that assist firms in making short-term investments. Structured debtdebt that has been customized for the buyer, often by incorporating unusual options. Subordinated debtdebt over which senior debt takes priority. In the event of bankruptcy, subordinated subordinated debtdebt that may be repaid in bankruptcy only after senior debt is paid. Subordinated Debtdebt instruments that provide financing for acquisitions, expansion and restructuring, take secondary security against assets, have fixed or flexible terms of repayment and charge fixed or floating interest rates. Total debt to equity ratioA capitalization ratio comparing current liabilities plus long-term debt to Total Debt to Total Assets RatioSee debt ratio Trade debtAccounts payable. Unfunded debtdebt maturing within one year (short-term debt). See: funded debt. Uniformed Services Employment and Reemployment Rights Act of 1994A federal act that minimizes the impact on people serving in the Armed Forces Unsecured debtdebt that does not identify specific assets that can be taken over by the debtholder in case of default. accounts receivableShort-term, non-interest-bearing debts owed to a CreditorsPurchases of goods or services from suppliers on credit to whom the debt is not yet paid. Or a DefeasancePractice whereby the borrower sets aside cash or bonds sufficient to service the borrower's debt. financing decisiona judgment made regarding the method Working capitalCurrent assets less current liabilities. Money that revolves in the business as part of the process of buying, making and selling goods and services, particularly in relation to debtors, creditors, inventory and bank. Related to : financial, finance, business, accounting, payroll, inventory, investment, money, inventory control, stock trading, financial advisor, tax advisor, credit. |